The Pros and Cons of Plans to Tackle Foreclosure Crisis by Presidential Candidates

The pros and cons of plans by the presidential candidates to tackle the foreclosure crisis have to be viewed against its long-term effect on the economy. The White House race has become a show of economic jugglery and who has the best plan up his sleeves to stump the raging foreclosure crisis. The average American is in distress. Hope has to be instilled to get the votes.

The latest suggestions by Senators Barack Obama and John McCain are efforts at appeasement. Americans are afraid about losing jobs, houses and even their lifetime savings. Both are trying to equate Wall Street rescue measures with giving relief to Main Street. Both the plans have plus and minus points but the running theme is that while the relief may be minimal there are doubts also about its long-term impact.

According to the plans of McCain $52.5 billion will give a fillip to unemployment benefits by 10%. Withdrawals by individuals from their retirement accounts and 401(K) plans will involve lesser tax cuts. McCain also endorses the plan of the government buying up the sub-prime mortgages and then negotiate them into traditional long-term loans with lower interest so that the borrowers can remain in the houses that are their homes.

Democrat Obama has come forward with a $175 billion plan with new motivations and encouragements. This year federal tax rebates to the tune of $60 billion will be offered. The state and local governments will be assisted to go ahead with improvements in the infrastructure, extend benefits for federal unemployment and put into force a 90-day hold on all house foreclosures.

McCain remains vague about how he would actually help the foreclosure victims – it being a complex task. The question is that at a time when savings are at an all time low should the Americans be facilitated to pull out their funds? Relatively Obama’s stand on foreclosures sound better but it smacks of temporary Band-Aid measure. After the expiry of the 90 days what is going to happen? The question hangs in the air. Obama’s plan about temporary reprieve from taxes on benefits from unemployment benefit may serve as a tonic to the economy because the unemployed would then start spending the money.

Many economists opine that neither of the plans have the necessary force to stop the fear of impending recession.